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Expanding generics basket
GSK India’s annual report highlights launch of branded generic products
that originally belong to some of the competitors. GSK India has launched
branded generic version of atorvastatin (Pfizer’s product). With the
product being priced at lower end of the market (1/3rd the price of market
leader), it suggests that GSK India intends to go aggressively after
market share. Over coming 3-5 years, we expect more such launches
from the company to boost growth rates from current below market
average rate. This could lead to further expansion of PE multiples.
Growth push via new launches
GSK India management expects sales growth to inch up as they expand their
portfolio of branded generics in India along with continued focus on launching
patented products from the GSK Plc basket. The management earlier guided
for growth of 12-14% approaching market average. GSK India introduced
branded generics in key therapy areas like cardiovascular, pain management
and anti-infectives during CY10. Most of the products launched over the last
year have grown well and contributed to 26% of total incremental revenue
growth in CY10. The company has strengthened its field force to c. 2,800 now
with addition of some specialist sales personnel to cater to new product
introductions.
Growth could inch up with broader product basket
The management intends to continue launching further branded generics. The
manufacturing has been sourced to local Indian players like Hetero drugs for
atorvastatin while GSK focuses on marketing aspect. Apart from 5-6 branded
generics, some of the innovative products that they intend to launch during
CY11 are Synflorix, Infanrix-Hexa, Votrient, Revolade and some dermatology
products from the Stiefel range.
Rich valuations though potential to enhance growth rates
Over coming years, we expect GSK India should be able to enhance it growth
rate to higher than market average levels if it accelerates launches of branded
generic drugs along with patented and in-licensed products. We, however,
maintain U-PF rating considering rich valuations and believe that market
share gains would be gradual and a lot more effort would be required on
enhancing product basket. We have revised our target price to Rs2,250 per
share based on 25x CY12 earnings (rolled forward one year and increased
target PE from 22x to 25x).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Expanding generics basket
GSK India’s annual report highlights launch of branded generic products
that originally belong to some of the competitors. GSK India has launched
branded generic version of atorvastatin (Pfizer’s product). With the
product being priced at lower end of the market (1/3rd the price of market
leader), it suggests that GSK India intends to go aggressively after
market share. Over coming 3-5 years, we expect more such launches
from the company to boost growth rates from current below market
average rate. This could lead to further expansion of PE multiples.
Growth push via new launches
GSK India management expects sales growth to inch up as they expand their
portfolio of branded generics in India along with continued focus on launching
patented products from the GSK Plc basket. The management earlier guided
for growth of 12-14% approaching market average. GSK India introduced
branded generics in key therapy areas like cardiovascular, pain management
and anti-infectives during CY10. Most of the products launched over the last
year have grown well and contributed to 26% of total incremental revenue
growth in CY10. The company has strengthened its field force to c. 2,800 now
with addition of some specialist sales personnel to cater to new product
introductions.
Growth could inch up with broader product basket
The management intends to continue launching further branded generics. The
manufacturing has been sourced to local Indian players like Hetero drugs for
atorvastatin while GSK focuses on marketing aspect. Apart from 5-6 branded
generics, some of the innovative products that they intend to launch during
CY11 are Synflorix, Infanrix-Hexa, Votrient, Revolade and some dermatology
products from the Stiefel range.
Rich valuations though potential to enhance growth rates
Over coming years, we expect GSK India should be able to enhance it growth
rate to higher than market average levels if it accelerates launches of branded
generic drugs along with patented and in-licensed products. We, however,
maintain U-PF rating considering rich valuations and believe that market
share gains would be gradual and a lot more effort would be required on
enhancing product basket. We have revised our target price to Rs2,250 per
share based on 25x CY12 earnings (rolled forward one year and increased
target PE from 22x to 25x).
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